Saturday, October 29, 2011

Container Store

On Thursday, I did a very dangerous thing. I talked about trade law in a room of about 100 trade lawyers and judges from both the Court of International Trade and the Court of Appeals for the Federal Circuit. This was at a CIT and Customs and International Trade Bar Associations sponsored event in DC, which was a great success.

The topic was the identification of situations in which judicial review raised more questions for the relevant agencies and parties than it resolved. As it turns out, that phenomenon is more easily found in antidumping and countervailing duty law than in customs law. We discussed issues like zeroing, the ITC's causation analysis where non-subject imports are in the market, and the application of adverse facts available. In all cases, the trade lawyers on the panel expressed concern about the courts swinging from one position to another or injecting new elements into what might have been a settled analysis. My role was to moderate, so I had little to add. But, it was an interesting conversation for me.

Plus, I had the surprisingly awesome experience of sitting in the big judicial chair in the Federal Circuit's very impressive court room. I had never seen that courtroom from that side of the bench.

On the topic of ambiguity in customs law, it was easier to find situations in which judicial review cleared up some question. Such is the case with this decision involving imports by the Container Store. The issue is very similar to the question presented in storeWALL, which we previously discussed. The issue in Container Store had to do with the classification of components of elfa brand shelving systems. Customs and Border Protection wanted the "top racks" and the corresponding vertical standards classified as base metal mountings and fittings in Heading 8302. The plaintiff, on the other hand, wanted the merchandise classified as parts of furniture in 9403.

Here is a picture of what I think was at issue (with the exception of the horizontal shelf bracket).

Initially, it is pretty easy to see what Customs is thinking. The products appear to have more in common with mounting hardware than with furniture. In terms of how CBP officials at ports handle merchandise, looking into a box of these things would not bring chairs, beds, cupboards, or any other furniture to mind.

On the other hand, the Federal Circuit essentially resolved this dispute in storeWall where it found similar complete systems to be "unit furniture." The argument turns on the fact that these systems are flexible and modular. When fully assembled, the user might build a system with drawers and shelves, which would qualify as furniture. On the other hand, the user might only install pegs and hooks, which would not qualify as furniture. In storeWALL, the CIT upheld Customs' argument that the goods could not be classified as furniture unless, at the time of entry, the configuration was certain to qualify as furniture.

The Federal Circuit reversed that decision on the grounds that "unit furniture" implies flexible storage systems that can be configured as desired by the user. The CIT, helpfully followed that guidance and reached a consistent conclusion with respect to the Container Store merchandise. Thus, the CIT has done its part to avoid creating any ambiguity with respect to this kind of stuff. We can only hope that the Federal Circuit, if asked, will follow suit.

Congratulations Frances on your win.

No comments: